You open your HMRC account, see £6,000 next to the word overdue, and close it again.
Short answer. Tell HMRC before you fall behind if you can. It can agree a payment plan if it thinks you can afford one. If you say nothing, a 5% penalty is added at 30 days, 6 months and 12 months, interest runs at 7.75%, and HMRC can eventually take money from your bank account. Free advice: StepChange on 0800 138 1111.
Based on GOV.UK: if you cannot pay your tax bill on time, what will happen if you do not pay, Self Assessment penalties and HMRC interest rates, checked October 2026. Scotland has its own court steps, noted below. Self Assessment is the yearly tax return used by self-employed people and anyone with income not taxed through a payslip.
What the bill grows into
HMRC adds two things to an unpaid Self Assessment bill. GOV.UK lists late payment penalties of 5% of the unpaid tax at 30 days, another 5% at 6 months and another 5% at 12 months. Interest is charged as well. The late payment interest rate is the Bank of England base rate plus 4%, and it has been 7.75% since 9 January 2026.
| After | Penalty added | Running total of penalties on £6,000 |
|---|---|---|
| 30 days late | 5% | £300 |
| 6 months late | a further 5% | £600 |
| 12 months late | a further 5% | £900 |
Our own illustration: you owe £6,000 and pay nothing for 12 months. The three penalties come to £900. Interest at 7.75% for a year is roughly £465, if the rate stays the same. So the bill is about £7,365, around £1,365 more than you started with.
Now the other route. Pay the same £6,000 in 12 monthly payments of £500 and the interest on the balance as it falls comes to roughly £252. That figure does not include any penalties HMRC may add, which is something to ask HMRC about when you call, because your own dates and rates will change the numbers.
The payment plan: what HMRC asks for
GOV.UK says HMRC checks whether a plan is affordable for you. If you cannot agree one, it will ask you to pay the full amount.
You can use the online service to check you are eligible and set up a plan. If you cannot apply online, you contact HMRC and explain whether you can pay in full, how much you can repay each month, any other taxes you owe, your income, your usual monthly spending and any savings or investments.
Have these ready: the reference number for the tax you cannot pay, UK bank details with permission to set up a Direct Debit, and your income and spending. HMRC expects you to use savings and other assets to cut the debt first. It also accepts a Standard Financial Statement, the budget form independent debt advisers use, as proof of your income and spending, so a free adviser at StepChange or Citizens Advice can do much of the paperwork.
If you miss a payment, HMRC says it will contact you to find out why and, where possible, try to rearrange the plan. If you cannot pay another tax bill, tell HMRC, which may add the new bill to the plan you already have.
What HMRC can do if you go quiet
GOV.UK says its enforcement powers are not listed in any particular order and are used as a last resort. HMRC will normally try to contact you and agree a way forward first. After that, the steps can include the following.
| Step | What it means |
|---|---|
| Visit or debt collection agency | A collector can ask about your finances and agree a payment. Agencies contact you by letter, text or phone only, never in person, and are regulated by the FCA. |
| Taking goods | HMRC warns you and offers a chance to pay first. In England and Wales the formal notice of enforcement costs £75. Taking control of goods costs £235 plus 7.5% of the debt over £1,500. |
| Direct bank recovery | Possible in England, Wales and Northern Ireland when you owe £1,000 or more and your accounts hold enough beyond reasonable living costs. |
| Your tax code | In the current year HMRC can collect through your tax code, up to 50% of your gross income. |
| Court action | Charging orders (a claim against your property), attachment of earnings (money taken from wages) and third party debt orders (money taken from a bank). These need a court. In Scotland HMRC uses a sheriff court summary warrant, and a charge gives you 14 days to pay or agree a plan. |
| Insolvency | The final step, used when the debt cannot be recovered, someone avoids paying despite being able to, or is dishonest about their assets. |
Our guide to what collectors and bailiffs can and cannot do covers the rules on visits and goods.
Where HMRC sits among your other debts
Both StepChange and Citizens Advice list unpaid income tax, National Insurance and VAT as priority debts. HMRC can act without a court, so it belongs above credit cards, loans and catalogues. Our guide to priority and non-priority debts shows the full list and what to pay first.
If the total is more than you can ever pay
A plan only works if the payments are realistic. If your debts are out of reach, the Bankruptcy and DRO Checker shows which formal options might fit, and a free adviser can look at your whole budget, not just the tax bill.
Questions at 2am
Can HMRC take money straight from my bank account?
Yes, in England, Wales and Northern Ireland. GOV.UK says direct recovery is possible when you owe £1,000 or more and your accounts hold enough beyond reasonable living costs. GOV.UK does not list a court order as a requirement for this step.
Will HMRC send bailiffs?
HMRC can take control of goods. It warns you and offers a chance to pay first. In England and Wales a formal notice of enforcement costs £75, and collecting the goods adds further fees. HMRC’s own collectors can do this without a court warrant.
What is the penalty for paying late?
For Self Assessment, GOV.UK lists 5% of the unpaid tax at 30 days late, another 5% at 6 months and another 5% at 12 months. Interest is charged on top. The late payment interest rate has been 7.75% since 9 January 2026.
Can I pay my tax bill in instalments?
If HMRC agrees you can afford it, yes. You can check eligibility and apply online, or contact HMRC if you cannot. You will need your tax reference, UK bank details for a Direct Debit, and your income and spending. HMRC expects you to use savings to reduce the debt first.
What if I just do nothing?
HMRC says its steps are used as a last resort and run from letters and visits to collection agencies, taking goods, direct bank recovery, your tax code, court action and, finally, insolvency. Doing nothing hands it the choice of which step comes next.
More UK help: UK debt help hub.
Disclaimer: DebtShift is an educational platform operated by H Ali Logistics Ltd, which is not authorised or regulated by the Financial Conduct Authority (FCA). This article is general education, not financial or legal advice. For free, impartial debt advice, contact StepChange on 0800 138 1111.
Sources
- GOV.UK, If you cannot pay your tax bill on time
- GOV.UK, Setting up a payment plan
- GOV.UK, What will happen if you do not pay your tax bill
- GOV.UK, Self Assessment tax returns: penalties
- GOV.UK, HMRC interest rates for late and early payments
- StepChange, What debts to pay first
Last reviewed October 2026
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